SEBI Changed IFSC Guidelines on Financial Reporting

Markets regulator Sebi revised its guidelines on reporting of statement of accounts for entities listing their debt securities in International Financial Services Centre (IFSC).

Under the new framework, entities listing their debt securities in IFSC will prepare their statement of accounts in accordance with International Financial Reporting Standards (IFRS) or US GAAP (Generally Accepted Accounting Principles) or Indian accounting standards or accounting standards as applicable to them in their place of incorporation, Sebi said.

In case an entity does not prepare its statement of accounts in accordance with IFRS or US GAAP or Indian accounting standards, a quantitative summary of significant differences between national accounting standards and IFRS will be prepared and incorporated in the relevant disclosure documents to be filed with the exchange, Sebi said.  It further said if the issue is targeted at institutional investors, then a quantitative summary of significant differences will not be required and a statement of differences between local accounting standards or IFRS or Indian accounting standards would suffice.

Apart from statement of differences, such issuers need to give a disclaimer that they “have not quantified the effect of applying IFRS/ US GAAP / IND AS to its financial information and investor may make their own judgment in accessing the financial information”.

Currently, an issuer of debt securities in IFSC needs to prepare its statement of accounts in accordance with Companies Act as applicable in IFSC.

In a separate circular, Sebi said an entity based in India or in a foreign jurisdiction may provide financial services in IFSC, subject to compliance with the applicable regulatory framework.

At present, a recognised entity desirous of operating in IFSC as an intermediary may form a company to provide such financial services relating to securities market, as permitted by the regulator.

To give effect to these, Sebi has amended IFSC guidelines.